Q: Condo and Co-op 8 – What are the major factors involved with the individual unit owner’s NFIP Dwelling Policy’s coverage limitations with respect to the condominium association’s RCBAP coverage?
A: The following examples demonstrate how the unit owner’s NFIP Dwelling Policy may cover in certain loss situations:
Example 1: RCBAP
If the unit owner purchases building coverage under the Dwelling Policy and if there is an RCBAP covering at least 80 percent of the building replacement cost value, the loss assessment coverage under the Dwelling Policy will pay that part of a loss that exceeds 80 percent of the association’s building replacement cost allocated to that unit.
The loss assessment coverage under the Dwelling Policy will not cover the association’s policy deductible purchased by the condominium association.
If building elements within units have also been damaged, the Dwelling Policy pays to repair building elements after the RCBAP limits that apply to the unit have been exhausted. Coverage combinations cannot exceed the total limit of $250,000 per unit.
Example 2: No RCBAP
If the unit owner purchases building coverage under the Dwelling Policy and there is no RCBAP, the Dwelling Policy covers assessments against unit owners for damages to common areas up to the Dwelling Policy limit.
However, if there is damage to the building elements of the unit (e.g., inside the individual unit) as well, the combined payment of unit building damages, which would apply first, and the loss assessment may not exceed the building coverage limit under the Dwelling Policy.